Lava plans to move export manufacturing base to India

Handset maker Lava International plans to shift its export manufacturing base from China to India this year on the back of an incentive scheme, and a top executive said the company will invest about Rs 800 crore over the next five years.

“We have been eagerly looking forward to an opportunity to shift our entire mobile R&D, design and manufacturing from China to India,” Hari Om Rai, chairman of home-bred Lava International, told ET. He said the company will invest Rs 80 crore for the transition that is planned to be executed within six months.

The government’s production-linked incentive (PLI) scheme is designed to address the disadvantages faced by global supply chains in India.

“With the production-linked incentives, our manufacturing disabilities for the world market would largely be met. Hence, we plan to make this shift. We see complete transition happening over a period of time. The transition will depend on demand as well as on our ability to capture market share in the global market,” said Rai, who is also the managing director.

Lava’s manufacturing facilities in China are outsourced, whereas its R&D and design facilities in China are owned by the company.

The handset maker said its India setup can handle all domestic and export demands.

The PLI scheme for large-scale electronics manufacturing was notified on April 1 and offers a production-linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including assembly, testing, marking and packaging (ATMP) units.

Besides having a strong foothold in the feature phones space, Lava has also established its presence in contact manufacturing. In September last year, it bagged a multi-crore deal from US conglomerate General Electric to manufacture hand-held devices meant specifically for medical use.

Along with Micromax, Lava had also bagged a Rs 2,500 crore order for manufacturing sub-$200 devices from US telco major AT&T along with rivals T-Mobile and Sprint.

Lava recently said it is raising $90 million (Rs 630 crore) from GEM Global Yield Fund to invest in R&D with the aim of boosting its position in the sub-$150 price segment.

GEM group is making the investment over the next 36 months through a share subscription facility, which will allow the company to sell American depositary receipts to the US fund house in exchange for drawing down available funds, Lava said in a statement.

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